Unit 4
what is cost analysis
-determines cost of each service by using 2 factors --fixed costs: do not vary depending on # of patients --variable costs: dollar amount does vary depending on # of patients --average cost of treating a patient declines because of fixed cost, not variable costs
daily financial practices
-how is the patient going to pay today? -follow established fee schedule -inform patient what it will cost
collection process
-ideally collect at time of service -the longer an office puts off collecting the leess likely they are receiving the money -collection ratio of 90% or better should be maintained -accounts receivable ratio: speed at which accounts are paid
aging accounts
-identifying how long an account has been overdue -can be computerized or manual -usually in increments of 30 days
past due accounts
-inability to pay -negligence -unwillingness to pay -third party payers -minors
collection policies
-inform patients in advance --when payment will be due --types of arrangements --at what point should a patient be reminded of an overdue bill --how is the reminder intially managed: telephone, note on the statement, or a letter --will a collection agency be used --at what point is an account delinquent --if there are exceptions, who makes the decision
petty cash
-kept for minor routine/unexpected -specific amount kept on hand -not for personal use by staff -tracking petty cash --petty cash vouchers --write checks for "cash" when replenishing --make sure all transactions are recorded and balance
adjustments
-made to change the patients balance when payment is not received -this is a credit column which usually reduces the overall balance --write off --professional discount --can be used for NSF checks
patient account or ledger
-manage patient accounts are recorded in an accounts receivable ledger -debit -credit -balance
bookkeeping
-managing patient accounts is very important -accounts receivable: money owed to an office --accounts to be received by the office -accounts payable: money owed by the office --accounts to be paid by the office -good habits --care and accuracy: try not to transpose numbers --keep work current --write legibly --use consistent ink color: black or blue preferred --align your columns (pegboard system) --decimal placement --double check math
banking procedures
-month end activities -online banking -other types of accounts -types of check s-accepting and depositing checks - inspect the check -lost or stolen checks - non sufficient checks (NSF check) -cash on hand -writing and recording checks (accounts payable)
billing
-monthly --1-2 days each month are devoted for billing and mailing bills --disadvantage: takes up a lot of the MA's time --best in small offices -cycle --accounts are divided alphabetically into groups, each group billed at a different time --useful with larger practices
computerized financial
-pegboard system - write it once system (day sheets, ledge cards, encounter forms, and receipt forms) -calculate charges/visit -monthly statements -create and update ledger card, patient data -transfers info to insurance -looks professional -quicker turnaround time for payment -less errors -less manual entries -time saver
pegboard system
-permits entry of: --charges --credits --arrangements -onto the day sheet, charge slip or receipt and patient ledger card simultaneously
collection techniques
-phone --most clinics will start with phone --patients appreciate the call, gives that personal touch --dont call at work, unless written okay ---collection call could be embarrassing to the patient --caller must identify themselves: make sure you have correct person --caller must identify themselves - make sure you have the correct person --call between 8am and 9 pm --never threaten -written notice --collection letter - generally after 2 statements have been mailed --how could we send this? ---mail, add importance, put certified -use of outside collection agency --follow office policy --fee charged can outweigh the amount collected -small claims court --limited amounts (varies state to state) --no attorney required --efficient/streamlined --takes time to prepare --no guarantees that you will collect -special circumstances --bankruptcy --estates --tracing "skips" - when someone basically disappears --statute of limitations - if it has been an extended amount of time
credit arrangements
-prior arrangements - patients must know this up front -payment planning --cash --check --credit --payment schedule
truth in lending act
-regulation Z of the consumer protection act of 1968 -must be clearly stated in writing -noted if there are charges/interest -is a bilateral agreement of more than four payments: --stated clearly in writing --states additional charges --total amount --monthly payment --when
lost checks
-report to the bank ASAP --they will place a warning on the account --signatures will be verified --account ma be closed --report to police if needed
accounting practices
-single -entry stems -pegboard accounting - write it once system --day sheets --ledger card --charge slips/superbills/encounter forms --receipt forms --all designed to work together to simplify the process while avoiding costly (and embarrassing) mistakes --all have matching columns that align and are held in place by the pegboard -double entry system -practice management system
adjustments of fees
-some insurance wont cover total charges -limited income -write offs -special circumstances -refunds - on rare occasion
complete statements
-statements should include -patients names and address --patients insurance carrier and identification number --date and place of service --description of service and fee for each services --accurate procedure and diagnosis codes for insurance processing --provider's signature and identification code of NPI
accepting checks
-verify date, amount and signature -witness corrections: watch correction be made -no out of town checks - unless you know the person -dont accept third party checks: some exceptions -dont accept if marked "payment in full" -dont accept for more than the amount owed
payment at time of service
-why is payment at time of service the best method? --ensures you get paid right away -process begins with the medical assistant scheduling the appointment -make sure patients have the information they need --patients knows up front what they will owe --this helps with promt collection --eliminates further bookkkeping --provides better cash flow for the office
Identify if the following are Fixed costs (FC) or variable costs (VC) 1. interpreting lab results 2. annual depreciation of cost of automatic ECG machine 3. medical benefits for clinic staff 4. purchase of reagent test strips for urinalysis 5. magazine subscriptions for reception area 6. monthly telephone expenses 7. medical journal subscriptions for providers 8. purchase of a HemoCue blood glucose system 9. weekly printing cost of patient education brochure 10. purchase of open shelf lateral files 11. adding a new position to clinic staff 12. property taxes 13. monthly cost of janitorial services 14. purchase of disposable needle syringe units 15. disposable paper gowns
1. VC 2. FC 3. VC 4. VC 5. FC 6. FC 7. FC 8. VC 9. FC 10. VC 11. VC 12. FC 13. FC 14. VC 15. VC
statutes of limitations vary from state to state but should be investigated if an unpaid account is more than how old?
3 years
lack of payment from a patient may not be considered serious until after how long?
60 days
collection ratio
a method used to guage the effectiveness of the clinics billing practices; shows the status of collections and the possible losses in the medical facilitiy
daily sheet
a record of daily patient transactions used in conjuction with pegboard system
utilization review
a review of medical services before they can be performed
balance
as a noun, this term denotes the amount owed; as a verb, the term means to record the difference between the debit and credit columns and show any amount due
posting
accounting function that describes the act of recording financial transactions in bookkeeping or accounting systems
which of the following is owner's equity not the same as?
accounts payable
truth in lending act
also known as the consumer protection act of 1967; an act requiring providers of installment credit to state the charges in writing and to express the interest as an annual rate
balance sheet
an itemized statement of assets, liabilities, and owner's equity; also called the statement of financial condition
what is the name for the itemized statement of the financial position of a business?
balance sheet
if a check has been deposited and is now returned because of nonsufficient funds, what is the first step to take?
call the bank that returned it and verify availability of funds so the check can then be redeposited
check register
categorizes and records all checks written
which of the following is another name for the patient encounter form?
charge slip and superbill
which statement below is true about using the telephone to help collect money from patients?
collections must abide by the Fair Debt Collection Practice Act
credit
column to the right of the debit column used for entering payments; decrease the balance due by reducing the amount in the debit column
the truth in lending act is also known as what?
consumer protection act of 1967
what is the definition of a "skip"?
one who moves without a forwarding address and leaves an unpaid bill
fixed costs
cost that does not vary in total as the number of patients varies
variable cost
cost that varies in direct proportion to patient volume
trial balance
created by totaling debit balances and credit balances to make sure that total debits equal total credits
the pegboard system consists of which of the following?
day sheets, ledger cards, encounter forms, receipt forms
liability
debt and other financial obligations for which one is responsible
fair debt collection practice ac
debt collectors are not allowed to use their positions to collect a debt using any manner of work performance that is found to be abusive, deceptive, or unethical
statute of limitations
defines the period of time in which legal action can take place
examples of variable costs include all of the following except what?
depreciation
what is an example of a fixed cost?
depreciation of equipment
which method is identified as a good working habit for financial transactions?
double checking all entries for accuracy, and keeping the bookkeeping tasks current and up to date
clinic manager Walter Seals, CMA (AAMA), was responsible for implementing a computer system at Inner City Urgent Care. before the computerized accounting program was put into effect, the urgent care center relied on a manual system of checks and balancees that allowed the provider-employers to keep a firm hold on the relationship between the facilities assets and the sum of liabilities and net worth
double entry
of the following statements, which is false?
double entry bookkeeping is expensive
what is the system that is based on the accounting principle that assets equal liabilities plus owner's equity?
double entry system
bonds may be purchased to protect the practice from which of the following?
embezzlement and financial loss
the charge slip is also known by what other name?
encounter firm
assets include which of the following?
equipment and supplies on hand, building or property, accounts receivable
what step should be taken when a patient files for bankruptcy?
file a proof of claim form and provide a copy of the patients outstanding account to the bankruptcy?
a hospital cost report for Medicare is considered a part of which of the following?
financial accounting
income statement
financial statement showing net profit or loss
accounts receivable ratio
formula that measures the speed in which outstanding accounts are paid
cost ratio
formula that shows the cost of a procedure or service and helps determine the financial value of maintaining certain services
collection ratio
formula that shows the percentage of outstanding debt collected
in cases of divorced parents and blended families, what is the parent with physical custody of the child, considered the one responsible for payment if the child is not insured with a contracted insurance carrier, referred to as?
guarantor
what is one of the most common reasons why patient bills go unpaid?
inability to pay because of financial hardship
adjustments
indicate any insurance payment, personal, personal discount or write off, or any other subtraction for the amount that needs to be recorded
what is a necessary step when accepting checks from patients?
inspect for correct date, amount, and signature; immediately stamp with a restrictive endorsement
which of the following is a reason a proper contract should be negotiated and signed with any computer and billing service bureau?
it ensures confidentiality and strict privacy of patient information; it is required for HIPAA compliance
which of the following statements regarding the use of debit/credit cards by patients to pay for services in ambulatory care settings is accurate?
it is a financial arrangement increasingly being used
what is the definition of aging accounts?
it is a process of identifying overdue patient accounts
what is the purpose of utilization review?
it is a review of a procedure before it is performed to determine if it is necessary
which of the following is an accurate description of cycle billing?
it is a system in which accounts are divided into sections for billing purposes
which of the following is true of the Truth in Lending Act?
it is also known as Regulation Z
which of the following is true regarding using a collection agency for patient accounts?
it is better if the agency handles only medical and dental accounts
which of the following is an accurate description of the debit column of a ledger?
it is the column on the left; used to enter charges, procedure codes, and description of services
what is a claims register?
it may also be called the insurance pending report
which of the following statements is an accurate description of petty cash?
it pays for routine and unexpected minor expenses of the clinic
what is the purpose of a check register?
it records all checks and categorizes them into separate columns
what is true of the collection ratio in a medical facility where the total receipts including any adjustments are $83,500 and the total charges equal $97,750?
it shows a fair return at 85%
which of the following is true of a collection ratio?
it shows status of collections and possible losses, it should be 90% or better
what is a computer billing and service bureau?
may compromise patient confidentiality; can function through linkage of computers online servicing, or off line batch processing
accounts receivable ratio
measures the speed with which outstanding accounts are paid
who is the advanced beneficiary notification form used primarily for?
medicare patients
petty cash
money (small amount of cash) kept in the clinic for minor or unexpected expenses such as postage due mail or coffee supplies
what does the acronym NSF stand for?
nonsufficient funds
when the patient returns the charge slip to the reception desk after an exam, administrative medical assistant Ellen Armstrong carefully replaces and lines up the charge slip with the patient's name on the day sheet, then correctly inserts the ledger card under the last page of the charge slip. she proceeds to enter the total charges due and any patient payments
pegboard
what is the most common method of tracking a patients balance?
pegboard system, computerized financial systems
which of the following is a capability of a practice management system?
process insurance claims electronically, manage payroll and purchases, generate financial records
assets
properties of value that are owned by a business entity
which of the following is true of bonding?
protects medical clinic staff and providers if embezzlement occurs; can be purchased in three different types
what should the medical assistant do for an insurance claim pending more than 45 days?
rebill the insurance company, check on the processing status of the claim with the carrier
during a temporary week long down period in the computer system at Inner City Health care while a system upgrade is being installed, administrative medical assistant Ellen Armstrong, CMAS (AMT), completes each days financial transactions in a daily journal, then transfers this information to the ledger through the posting process. the information will be entered into the computer once the system is up and running again
single entry
what is the term for patients who owe money but have moved and left no forwarding address?
skips
what is the purpose of a restrictive endorsement stamp?
stamp on the back of a check to signify "for deposit only"
accounts payable
sum owed by a business for services or goods received (bills, refunds or overpayments, replenishment of petty cash, etc)
accounting
system of monitoring the financial status of a facility and the financial results of its activities, providing information for decision making
cash basis
system of reporting income where income is recognized at the time the money is collected
accrual basis
system of reporting income where income is reported at the time charges are generated
owner's equity
the amount by which a business's assets exceed the business's liabilities
what best describes reconciling a bank statement?
the checkbook entries should be check against the bank statement
what is a tip for finding an error of a transposed number in financial reports?
the error is divisible by 9
what happens when an unpaid account goes to small claims court?
the medical clinic is still responsible for collecting even if the court finds in its favor
cost analysis
the purpose of this is to determine the cost of each service
which of the following is an accurate description of receptis?
they are used for payments on accounts
which of the following is true regarding encounter forms?
they can be ordered to fit the practice; they list common services provided, procedural code, and diagnosis code
why should providers purchase fidelity bonds?
they will reimburse the practice for any monetary loss caused by the practice's employees
why is it important to ensure proper control over purchasing of supplies and equipment?
to avoid purchase of unnecessary items; to avoid duplication of items purchased; to provide a system for payment of only those items properly ordered and received
what is the purpose of the first section of the manual day sheet?
to provide individual transactions
accounts receivable
total amount of money owed to a business for services or good supplied
how is the trial balance created?
totaling debit balances and credit balances to confirm that total debits equal total credits
what should you consider in determining how aggressive to be in debt collections?
value of the debt owed
what is the name for a check with an attached stub for recording information?
voucher check
chapter 13 bankruptcy is otherwise known as?
wage earners bankruptcy
when can money be saved with accounts payable?
when bills are paid promptly, and when discounts are realized
when is the most appropriate time to discuss fees and the patient's financial concerns?
when scheduling an appointment
what is the pegboard system of bookkeeping sometimes called?
write it once system